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02-27-1984 CC MIN REGULAR SCHEDULED MEETING OF THE ELK RIVER CITY COUNCIL HELD AT THE ELK RIVER PUBLIC LIBRARY MONDAY, FEBRUARY 27, 1984 Members Present: Mayor Hinkle, Councilmembers Engstrom, Duitsman, Schuldt and Gunkel Members Absent: None 1. The meeting was called to order at 7:30 p.m. by Mayor Hinkle. 2 . Agenda COUNCILMEMBER GUNKEL MOVED TO APPROVE THE FEBRUARY 27, 1984 CITY COUNCIL AGENDA. COUNCILMEMBER SCHULDT SECONDED THE MOTION. THE MOTION PASSED 4-0. 3. Hearing Regarding Recommendation for Dismissal of David Dahlberg Mr. Lais, Attorney for Mr. David Dahlberg, indicated that there was not enough time to review the memorandum from the City Administrator to the Mayor and City Council dated February 24, 1984, regarding the City's position for recommendation for dismissal of Mr. David Dahlberg. Mr. Lais indicated that Mr. Dahlberg under- stands that it is the City Administrator's right to fire an employee, subject to the City Council approval. Mr. Lais further indicated that he wanted to make Mr. Dahlberg's position clear regarding entitlement to a Veteran's Preference hearing and was requesting that the City Council consider the Veteran's Preference Hearing procedure. Mr. Lais indicated that he chose not to present any information at this hearing. Mr. Lais further indicated that the time spent on this hearing could be eliminated if the City Council would consider the Veteran's Preference hearing procedure. Mayor Hinkle indicated that the hearing was scheduled for Mr. David Dahlberg by the City Council and further indicated that he felt the City Council should hold the hearing for the benefit of the citizens present, and Mr. Dahlberg. The City's Attorney, Mr. Jim Strother, indicated that the hearing was scheduled by the City Council's procedural process as expressed in Section 218.52 of the City's Code of Ordinances. Mr. Strother indicated that Mr. David Dahlberg exercised His right to request a hearing before the City Council, and at that hearing, each party shall have an opportunity to be heard and to present evidence relevant to the proceedings. The City Administrator indicated that Mr. Lais has indicated that Mr. Lais and Mr. Dahlberg have requested a Veteran's Preference hearing, regarding the dis- missal of Mr. Dahlberg. The City Administrator further indicated that the City's position is that even though Mr. Dahlberg is a veteran, he is the head of a department and the provisions of the Minnesota Statutes are not applicable and therefore, the hearing to discuss and review the suspension and recommendation for dismissal should be held in accordance to the requirements and guidelines of the City Code. The City Administrator indicated that the areas of concern as expressed in his memorandum to the Mayor and City Council dated February 24, 1984, to be considered at this hearing are concerns relative to the inventory, concerns relative to management style and practices, the acceptance of shares of stock in the Coca Cola Corporation and the acceptance and personal use of promotional merchandise. The City Administrator indicated that in 1981, the liquor store inventory reached City Council Minutes February 27, 1984 Page Two a high of approximately $250,000 and that at that time, the City Council specifically requested that the liquor store inventory be maintained at an approximate $175,000 figure. The City Administrator indicated that this proposed inventory level was arrived at through comparisons with other muni- cipal liquor stores and discussions with the City's auditors. The City Administrator indicated that a monthly review of the liquor store inventory was done throughout 1982 in order to maintain the approximate $175,000 limit. The City Administrator indicated that during the year 1983, the monthly review was discontinued and two actual physical inventories were taken. The City Administrator indicated that it was apparent that it was the practice of the liquor store manager to decrease inventory at the time of the physical inven- tory count and then to allow the inventory to increase substantially. The City Administrator indicated the practice of decreasing the inventory at the physical inventory count caused shortages in the popular items which then created customer dissatisfaction and loss of sales. The City Administrator indicated that in addition to the problems of shortages and the loss of customer business, the excessive high inventory resulted in loss of interest income, as money was tied up in liquor inventory. The City Administrator indicated that Mr. Dahlberg's management style did not encourage any creative thinking among his employees or particiaption of his employees in the decision making process. The City Administrator indicated that Mr. Dahlberg did not adequately communicate information relative to the operation of the store, the goals of the store or other related information -to his employees in order for them to do an effective job. The City Administrator indicated that one specific example of Mr. Dahlberg's management style was demonstrated in the recent attempt to replace the cooler doors and shelving at the municipal liquor store. The City Administrator indicated that Mr. Dahlberg had a specific design of the shelving units and cooler doors to be used and the assistant manager suggested an alternate design of the shelving units and cooler doors. The City Administrator indicated that Mr. Dahlberg was not open to the assistant mana- ger's suggestions and in fact, threatened to fire the assistant manager in the event he generated any other ideas or attempted to discuss activities regarding the liquor store or its operations, with the City Administrator. The City Administrator indicated that he had arranged a joint meeting with the liquor store manager and the assistant manager regarding the design and purchase of the shelving units and cooler doors for the liquor store. The City Administrator further indicated that Mr. Dahlberg did not discuss alternate designs after the meeting with his assistant manager, and simply resubmitted his design. The City Administrator further indicated that Mr. Dahlberg's handling of the assistant manager's suggestions only resulted in a negative reaction from that particular employee. The City Administrator indicated that Mr. Dahlberg's management style is clearly one which is inefficient, ineffective and demonstrates incompetent behavior on behalf of Mr. Dahlberg. The City Administrator indicated that in the summer of 1983, Mr. Dahlberg agreed to participate in a promotion of Coca Cola products sponsored by Viking Coca Cola, and in this promotion, Mr. Dahlberg agreed to display a certain quantity of Coca Cola products in the Elk River Municipal Liquor Store for a certain designated period of time. The City Administrator indicated that in return for Mr. Dahlberg's agreement to display the Coca Cola for a certain length of time, and in a certain quantity, the Viking Coca Cola Corporation offered Mr. Dahlberg shares in stock in the Coca Cola Company. The City Administrator indicated that Mr. Dahlberg accepted five shares of Coca Cola Stock valued at approximately $300.00 for participating in the Coca Cola promotion. The City Administrator City Council Minutes February 27, 1984 Page Three indicated that the Coca Cola Corporation stock was not used in any way for the promotion of the product and was in fact, a payment to Mr. Dahlberg after ful- filling certain obligations. The City Administrator indicated that those certain obligations were accomplished in the City's store on City time, with City resources. The City Administrator indicated that the public places a certain trust in public employees to perform their duties for a designated salary and not to .accept any other payment or gratuity from outside sources which may affect the decision-making process of that public employee. The City Administrator indicated that the loss of public trust in City government is an extremely serious reprecussionfrom the type of actions demonstrated by Mr. Dahlberg. The City Administrator indicated that the City's position regarding the. severity of Mr. Dahlberg's acceptance of the Coca Cola stock has also been upheld by the Unemployment Insurance Division of the Minnesota Department of Economic Security. The City Administrator indicated that in the investigation regarding the Coca Cola Corporation stock, it became apparent that significant amounts of pro- motional merchandise has been delivered to the Elk River municipal liquor store and has been taken home by Mr. Dahlberg for his personal use and consumption. The City Administrator indicated that over the period from November 1982 until early July 1983, a list of merchandise that Mr. Dahlberg took home for his personal use and consumption was made, and the value of the merchandise was estimated at over one thousand dollars. The City Administrator further indicated that the supporting employees' statements indicated that this pattern of taking home promotional merchandise taken home by Mr. Dahlberg is several thousands of dollars. The City Administrator cited two items of particular importance that Mr. Dahlberg accepted and took home; one, a Weber kettle barbecue grill, the second, a small television set. The City Administrator indicated that the barbecue grill was intended for promotional use, but was never used in the store. The City Administrator further indicated that the television set was part of a promotion offered to customers through a drawing. The City Administrator indicated that the television set was won through the drawing by Mr. Jim Thielke and when the television set was delivered to the store, Mr. Dahlberg took it home and refused to return it. The City Administrator indicated that employees have received caps and T-shirts which do not have a dollar volume and in fact, create employee morale and good will toward the City. The City Administrator further indicated that employees re- ceiving caps or T-shirts are not in the position of making management decisions. The City Administrator indicated that the items as outlined in his memorandum to the Mayor and City Council dated February 24, 1984, require serious consideration of the ability of Mr. Dahlberg to continue to function effectively as the liquor store manager. The City Administrator indicated that Mr. Dahlberg's actions have eliminated trust by the City Administrator, the City staff and potentially, the public and therefore, it is recommended that the City Council uphold Mr. Dahlberg's suspension without pay and further, based upon the findings as stated, dismiss Mr. Dahlberg as manager of the Elk River municipal store effective immediately. Mr. Lais, Attorney representing Mr. Dahlberg, requesting a Veteran's Preference hearing and to the atlegations of the City Administrator. David Dahlberg did not know the City's policy Coca Cola stock. indicated that they would be would then express their response Mr. Lais indicated that Mr. regarding the acceptance of the City Council Minutes February 27, 1984 Page Four The City Administrator indicated that the department heads participated in an entire City Code review prior to City Council adoption of the City Code. The City Administrator further indicated that Mr. Dahlberg also participated in the writing of a job description for the liquor store manager. Councilmember Duitsman indicated that Mr. David Dahlberg was hired to manage the liquor store and to promote reasonable priced liquor in the City of Elk River. Councilmember Duitsman further indicated tha1tin previous years, the City Council had various committees which reviewed and considered various oper- ations of the City. Councilmember Duitsman further indicated that the finance committee was responsible for the review of the liquor store operations, but in the last year, the committees have not held specific individual committee meetings and therefore, the City Council has not taken the time to review specifically, the liquor store operations. Councilmember Duitsman indicated that the success of 1982 versus 1983 is most greatly influenced by the economic conditions. Councilmember Duitsman indicated that he felt Mr. Dahlberg made a bad judgement in the acceptance of the Coca Cola stock and that in itself would be enough to discharge him as liquor store manager. Councilmember Duitsman further indicated that various residents in his ward have indicated that they feel the City Council would be wrong in firing Mr. David Dahlberg. General discussion was carried on regarding the liquor store operations for the past seven years, profits, in particular. Councilmember Schuldt indicated that he felt Mr. Dave Dahlberg's management style and his relationship with the City Council were areas of unacceptable behavior and very crucial to his position as liquor store manager. Council- member Schuldt further indicated that the acceptance of Coca Cola stock is highly improper and cannot be accepted from a liquor store manager. Councilmember Gunkel indicated that she felt if Mr. David Dahlberg had a problem with a directive of the City Council regarding the controlling of the liquor inventory, he should have discussed that problem with the City Council, rather than disregard their direction. Councilmember Gunkel further indicated that she also felt Mr. David Dahlberg's management style was unacceptable. Councilmember Gunkel indicated that she had gone to the liquor store to look at the cooler doors and discussed the shelving proposal with the liquor store manager. Council- member Gunkel indicated that as the manager was not present at the liquor store, she discussed the shelving and the doors with the assistant manager, Mr. Mike Donais. Councilmember Gunkel indicated that Mr. Donais indicated that he could not discuss the shelving or cooler doors with her because of the directive from the liquor store manager. Councilmember Gunkel further indicated that the reasons as stated in the City Administrator's memo to the Mayor and City Council was sufficient reasons for a discharge of Mr. David Dahlberg. Councilmember Engstrom indicated that Mr. David Dahlberg was hired with the high hopes of turning the liquor store business around and making a profit. Council- member Engstrom indicated that the on sale operation was sold and the one off sale liquor store was closed to concentrate on the liquor business at one location. Councilmember Engstrom indicated that the inventory volume was definitely a problem, as Mr. Dahlberg was directed to hold the inventory at approximately $175,000. Councilmember Engstrom indicated that he has received phone calls from residents on both sides of the issue. Councilmember Engstrom further in- dicated that the two specific issues, the inventory and the acceptance of the City Council Minutes February 27, 1984 Page Five Coca Cola stock, were his reasons for areco~endation for dismissal. Mr. Lais, Attorney for Mr. David Dahlberg, i~dicated that Mr. David Dahlberg I did not believe it was wrong to accept the Cqca Cola stock and could see no harm done to the City. Mr. Lais indicated tHat Mr. Dahlberg has run a success- ful operation of the liquor store and furtheJ indicated that Mr. David Dahlberg feels his age is a factor in the dismissal. 1MI'. Lais indicated that he felt the City Co-ncil should consider a disciplinary dction, rather than deprive a sixty- one year-old man of his means of livelihood. I Mr. Lais further indicated that the City of Wew Brighton fired their liquor ~tore manager for similar reasons and since the manager has left, the New Brig~ton liquor store profits have dropped considerably. . Mayor Hinkle indicated that he was the one t~at discovered the acceptance of the Coca Cola shares of stock by Mr. Dahlberg. Mayor Hinkle further indicated that he felt there were many problems with t~e liquor store and it was a very serious situation. Mayro Hinkle further ind~cated that because of the high in- ventory, interest was lost which was substantiial when interest rates were at the fifteen and sixteen percent level. Mayor Hi~kle indicated that the liquor store inventory problem and the acceptance of the Ooca Cola stock were sufficient reasons for Mr. Dahlberg's termination. I COUNCILMEMBER SCHULDT MOVED TO AUTHORIZE THEiDISCHARGE OF MR. DAVID DAHLBERG AS LIQUOR STORE MANAGER EFFECTIVE IMMEDIATELY. ICOUNCILMEMBER GUNKEL SECONDED THE MOTION. THE MOTION PASSED 3-1. COUNCILMEMBER DUITSMAN OPPOSED. I , Councilmember Duitsman indcated that he coul~ support item 4 of the findings as stated in the City Administrator's memora~dum to the Mayor and City Council, but could not support the other findings. ' COUNCILMEMBER SCHULDT MOVED TO APPROVE THE FqLLOWING FINDINGS AS PROPOSED AND EXPLAINED IN THE CITY ADMINISTRATOR'S MEMO Tq THE MAYOR AND CITY COUNCIL, DATED FEBRUARY 24, 1984, AS REASONS FOR THE DISCHAR(GE OF MR. DAVID DAHLBERG AS LIQUOR STORE MANAGER: i 2) I That Mr. Dahlberg's handling of the in~entory is evidence of acrelessness or negligence in the handling or control qf City property or equipment and pursuant to Section 218.52 of the City ICode of Ordinances, is cause for dismissal. ! 3) That Mr. Dahlberg's handling of the Liqiuor Store inventory and his insub- I ordinate act in refusing to surrender hlis keys upon suspension is evidence of failure to obey any lawful directio~ made and given by a superior, where such violation or failure to obey amounts to an act of insubordination or breach of proper discipline, which has Iresulted or reasonably might be ex- pected to result in loss or injury to ~he City or to the public, and pur- suant to Section 218.52 of the City Co~e of Ordinances, is a cause for dis- missal. 4) That Mr. Dahlberg's acceptance of shar~s of stock in the Coca Cola Corpora- tion and his acceptance or promotional !merchandise are evidence of soliciting City Council Minutes February 27, 1984 Page Six or accepting any fee, payment, favor, merchandise, or any other form of grat- uity in or because of the employee's official capacity as an employee of the City, and as such, is a cause for dismissal, pursuant to Section 218.52 of the City Code of Ordinances. 5) That Mr. Dahlberg's acceptance of the Coca Cola Corporation stock and other promotional merchandise is a practice which brings discredit upon the City service and pursuant to Section 218.52 of the City Code of Ordinances is a cause for dismissal. COUNCILMEMBER GUNKEL SECONDED THE MOTION . THE MOTION PASSED 3-0. COUNCILMEMBER DUITSMAN ABSTAINED. 2. Check Register COUNCILMEMBER DUITSMAN MOVED TO APPROVE THE FEBRUARY 24, 1984 CHECK REGISTER. COUNCILMEMBER GUNKEL SECONDED THE MOTION. THE MOTION PASSED 4-0. There being no further business, COUNCILMEMBER ENGSTROM MOVED THAT THE MEETING BE AD- JOURNED. COUNCILMEMBER SCHULDT SECONDED THE MOTION. THE MOTION PASSED 4-0. Respectfully submitted, ~~d~~~ City Clerk/Treasurer PB:dk